Auditing Case Essay

604 WordsMay 28th, 20163 Pages

Keith Parkinson
2/3/15
Auditing

Case 1: Merry-Go-Round

Merry-Go-Round (MGR) is a clothing retailer that was founded in 1968. The company’s locations were in malls that targeted the youth and teen market. In the late 1980s, the company was listed by Forbes magazine as one of the top 25 companies. By the early 1990s, sales fell due to stiff competition from other retailers. Facing bankruptcy, the company hired turnaround specialists from Ernst and Young (E&Y) to help overcome the financial crisis. However, the company filed for Chapter 11 reorganization and due to that a group of 9,000 creditors filed a lawsuit against E&Y saying they were the main reason for MGR’s decline. First of all, E&Y violated GAAS first standard…show more content…

Overall, I just think having a set of standards would keep a professional manner. Finally, we need to know if E&Y acted ethically throughout this engagement. E&Y had a close relationship with Rouse Co., one of MGR’s landlords. E&Y was soliciting business from Rouse and provided significant tax services. Also, Swidler and E&Y had participated in at least 12 different business arrangements, some of which resulted in Swidler receiving significant fees from E&Y. I think these relationships had a direct affect on E&Y’s advice to MGR. I think E&Y acted unethically because they didn’t keep independent which is a violation of GAAS. I think it was clearly unethical on E&Y’s part because they didn’t disclose any of this information with MGR. So, I purposely think E&Y worked together with Swidler to increase the fees because Swidler was the one that referred MGR to E&Y. To conclude, consulting advisors for E&Y could have conducted business with MGR in a more of a professional manner, especially when disclosing relationships. I also think MGR could have done a better job and looked into E&Y first before hiring them. In the end, I think E&Y was more at fault just because they were unethical about the entire situation and purposely hid information trying to help them…

actually in the UK. Because it was chartered in Luxembourg and Grand Caymans, Bank of England (BOE) thus thought itself as a secondary role in supervising BCCI, thereby reducing the level of scrutiny imposed on BCCI. In addition, BCCI has an uncommon auditing system. Price Waterhouse (PW) was the accountants for BCCI overseas, while Ernst & Whitney in charged of BCCI holdings. Two sets of auditors being used was to avoid them from publishing a meaningful consolidated accounts and make sure neither of…

investors’ next step was to sue the auditors of Stanford Financial Group. BDO, the accounting firm that was responsible for auditing Stanford’s financial statements, is currently the target of a major lawsuit. BDO did not act in accordance with the responsibilities of an auditor and thus led to audit risk, lack of independence, and various violations of the PCAOB’s auditing standards regarding investment securities.
BDO consistently issued unqualified reports when there were material misstatements…

Example auditing case
1)” Based on the information given in this case and your knowledge of auditor’s reports, identify the deficiencies in the draft of the proposed report. Do not redraft the report, but provide justification or explanation for each of the deficiencies you identify” (Pany, Auditor's Report, 2010).
A. In the Introduction paragraph it states “As discussed in Note K to the financial statements, the Company has properly disclosed a subsequent event dated March 14, 20x9” (Pany, Auditor's…

1 Auditing issues in Enron case
Independent
Needed for the Houston office of Andersen, an audit partner that understands the role of being a "public watchdog" with "ultimate allegiance to the creditors and shareholders" . Arthur Anderson abandoned its roles as independent auditor by turning a blind eye to improper accounting, including the failure to consolidate, failure of Enron to make $51million in proposed adjustments in 1997, and failure to adequately disclose the nature of transactions with…

Appreciative Internal Audit: A Strength-Based Approach to Quality System Auditing – A Case Study.
Jon Morris President JDQ Systems Inc. Vancouver, BC, Canada
Introduction
Traditional internal audits fulfill an important need for companies with fresh ISO 9001:2000 Quality Management System implementations, but for companies with mature systems, those registered for more than five years, an innovative approach to auditing called “Appreciative Internal Quality Audit” can take them beyond compliance…

& Partners
Re : Audit of Moss Green Ltd.
Company structure
Moss Green Ltd. is a wine grower and producer of medium to high quality wines, located in Western Australia’s Margaret River region. Tickit Associates was Moss Green’s previous auditing company and we were engaged immediately after it listed on the Australian Stock Exchange to take over as auditors. The company is successful in exporting internationally, especially in the United Kingdom supermarket chain, Safebury. Mr.Tom Green…

seller’s price to the buyer is fixed, which is $45 million, so that the company met the third criteria. However, the key issue is that the products have been completed but are still not delivered to the customer according to customer’s request. In this case, the ownership of those products has already been transferred to the customer. The auditor may also want to know that whether the customer has made the payment to Modis Manufacturing or not. If the payment has been made, then the revenue should be…

Case
You are the internal audit senior responsible for conducting an assurance engagement of the XYZ Company payroll process. This process has not been audited for three years and, as such, is due in the normal audit cycle. There have been no significant changes since the previous audit, that is, there were no system changes, no reorganization of personnel, and no substantive procedural changes. However, during the last assurance engagement, the internal audit function identified several observations…

Anonymous Caller Case Study
1 a) What would you recommend to the caller if you were Dr. Mitchell?
Since it appears that the firms top executives are all apart of the fraud and don’t plan on correcting their unethical action. I recommend that the anonymous caller completely remove himself/herself from the situation by resigning or by reporting the situation to the firm’s board of directors or a governmental agency.
b) What are the risks of continuing to work with the company?
There…